Cleveland City Councilmen received the news Monday during an annual retreat. City Clerk Mike Keith explained that the city’s income is $909,000 less in fiscal year 2010 than it was in 2007. The drop is from sales tax and state-shared revenue, and to a lesser extent, licenses and permits.
Licenses and permits fell from $540,832 three years ago to $362,471 in the current year. Two-thirds to 70 percent of the city’s revenue comes from sales and property tax receipts.
“There is no significant source out there except those two,” he said. “Even if permits double, you are only bringing in $300,000.”
In fiscal year 2013, the city loses half the fire contract with Bradley County which is another $900,000. The remainder of the $1.8 million goes away the following year in fiscal year 2014. In fiscal year 2013, the stimulus funds used to hire four police officers goes away and this will cost another $200,000.
While the city’s income has fallen, Keith said expenditures have remained steady, which was accomplished by decreasing the transfers to the Capital Improvement Program Fund and transfers to the Debt Service Fund.
“Basically, it means we transferred $1.5 million to the CIP in 2007,” Keith said. “We are transferring right at $325,000 now, just to cover computer equipment for the city.”
In fiscal year 2011, transfers to the Debt Service Fund will be reduced $900,000 less than what is needed to fully service the debt.
He said sales tax collections fell $1.079 million in fiscal year 2009 from $23.32 million in fiscal year 2007.
“We’re basically back to the amount we collected in 2006 on our sales tax. That’s how far back we’ve slid in what we are bringing in and it’s going to take awhile to make that up,” he said.
Collections in the last six months of fiscal year 2010 were better. There were four months of negative growth followed by four months of positive growth. September and October collections fell less than a half percent.
“I’ll be anxious to see the next several months if we’re still flat or what,” he said. “I think everybody is anxious to see what Christmas sales are like.”
Revenue from Christmas is returned from the state in February 2011.
Keith said he has worried more about this current budget than any other in many years.
“I quit worrying for a little while because my stomach couldn’t handle it,” he said. “If we have to make cuts to meet our budget, there are very few places we can cut. Our biggest expense is in people.”
Vice Mayor Avery Johnson said, “We’ve cut it to the bone the last couple of years just trying to stay even. We do need to do something now because I don’t know where we can cut now without reducing services.”
Keith said staff has not categorized services into essential and nonessential because needs change from year to year.
“What might be essential at one Council meeting, sometimes something else becomes essential at the next Council meeting,” he said. “I don’t know of very many places that we could cut people without sacrificing the services we feel like that you as a Council directed us to maintain.”
City Manager Janice Casteel asked if Cleveland would be the kind of place where people would want to live if Parks and Recreation or Community Development were cut.